Best Buy Still Trying -- and Failing -- To Make Magnolia Bloom
A decade after buying into the high-end home theater business with its acquisition of Magnolia Audio Video, Best Buy continues to tinker with the brand as it tries to make the $87 million purchase pay off. The Orange County Register reports Best Buy will open a new iteration of its Magnolia ministores, Magnolia Design Center, at a location slated to open later this month in Costa Mesa, Calif.
From the description, Best Buy is taking Magnolia even more high-end in terms of brands offered, and providing a more luxe setting that will even include a bathroom mockup with mirror where a flat-screen, high-definition TV waits, invisible, until it's turned on. A bedroom mockup will feature a hidden screen that rises from a dresser for viewing.
The downturn-related slump in the audiovisual industry the past couple years likely hasn't helped sales, though it's hard to tell as Best Buy doesn't report them separately for the 353 Magnolia centers inside its stores. It has shrunk the stand-alone Magnolia store chain it inherited in the deal from 22 units originally to six, closing seven of the units, its Seattle-area headquarters and separate distribution center last year. You'd think if the Magnolia gear was a standout contributor to sales or margins, the company would mention it.
But plenty's being said online about Best Buy's Magnolia concept by its customers -- comments that indicate the company is struggling to deliver a high-end experience along with its $3,000 flat-screen TVs. Search on "Best Buy Magnolia" and you'll find the first page of results dominated by customer complaints -- some about service levels, others about prices, most recently on Super Bowl-related deal offers... including three complaints on its own community forum. Twelpforce, where are you?
Possibly even worse, Best Buy appears to be shedding the higher-paid, more knowledgeable salespeople who have traditionally staffed the Magnolia ministores. The move is part of an ongoing companywide workforce restructuring effort begun last year. Possibly the company feels that with Circuit City out of the way, it can reduce staffing. This may cut costs, improve margins and possibly work in the rest of the store, but for the high-end Magnolia ministores, losing expert personnel could be a big problem -- as many think it was for Circuit City.
Given the staffing issues Best Buy has had with Magnolia, going even higher-end may not help. The company will do well not to forget that big-spending customers demand lots of hand-holding.